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Galaxy Digital CEO and long-time Bitcoin (BTC) bull, Mike Novogratz, thinks the potential downturn in the US economy will be a boon for crypto. Investors might find a safe haven in Bitcoin and other crypto assets during the time of economic slowdown.
Novogratz appeared in an interview with Bloomberg Television on Wednesday, where he affirmed his optimism on entities like gold and the euro along with crypto assets like Bitocin (BTC) and Ethereum (ETH). He said that during the time when the economy would hit a potential credit crunch in the wake of the US Federal Reserve’s easing its interest rates, the aforementioned assets would beat the traditional investment vehicles.
Novogratz said the failure in the failure of several banks made it tough for lenders to take borrowers, which would now be decreasing with time. The action will result in the slowdown of the economy.
Further, he emphasized, this will make the Federal Reserves come to rescue and aggressively decrease the interest rates. He estimated the lowering from the financial institution could come before the end of this year itself.
The credit crunch that Novogratz was talking about is likely to come in the aftermath of the Fed cutting the interest rates. For over a year now, the US central bank has been hiking interest rates to curb the inflation in the country. This ended up putting the broader banking sector in the grave struggling phase—several institutions reached the brink of collapse and some of them collapsed.
Popular crypto-friendly banks, Silvergate and Signature banks collapsed, tech start-up focused banking giant Silicon Valley Bank (SVB) bank also met the similar fate. This contagion in the US banking space affected the broader banking sector across countries. Several other banks, Swiss bank Credit Suisse for instance, took a hard hit in the following days.
According to the CEO of Galaxy, Bitcoin could find a “sweet spot” if the interest rates witness a drop in future. The instance of aggressive tightening of interest rates and failure of banking institutions in its aftermath, proved the motive of Bitcoin’s inception of creating an alternate decentralized financial system.
The instance of recent bank-collapse, instead of affecting, “re-galvanized” the crypto industry, Novogratz said. He argued that since the country is under the debt within as well as outside of the country, this will take a long time to pay back.
“You’re seeing that in this balance between a Federal Reserve that’s been fighting inflation and maybe moving rates a little faster than the market participants knew how to manage. Now, we’re going to have a credit crisis in the US and the economy is going to slow… It’s going to slow pretty dramatically.”
Earlier, the pro-crypto American investor also cited the looming credit crunch behind the recent rally in crypto market, specially Bitcoin (BTC). Bitcoin recently attained its ten-months high of 30,000 USD, since June last year. Currently the crypto asset is sustaining the level and trading at around 30,806 USD with over 10% rise in the last week.
Andrew is a blockchain developer who developed his interest in cryptocurrencies while pursuing his post-graduation major in blockchain development. He is a keen observer of details and shares his passion for writing, along with coding. His backend knowledge about blockchain helps him give a unique perspective to his writing skills, and a reliable craft at explaining the concepts such as blockchain programming, languages and token minting. He also frequently shares technical details and performance indicators of ICOs and IDOs.
